New Delhi: Centre today notified its decision to give dearness allowance (DA) to 7 per cent from existing 5 per cent from January 1, 2018, benefiting 48.85 lakh is employees and 55.51 lakh pensioners.
The Finance Minister Arun Jaitley moved the cabinet note on March 7 for approval of releasing of an additional installment of 2 per cent of dearness allowance to central government employees with effect from January 1, 2018.
“…the President is pleased to decide that Dearness Allowance payable to central government employees shall be enhanced from the existing rate of 5% to 7% percent of basic pay w.e.f. 01.01.2018,” a finance ministry’s office Memorandum No.1/1/2018-E-II (B) dated 15th March, 2018 said.
The DA has been increased by 2 per cent over the existing rate of 5 per cent of the basic pay to compensate for price rise and it is in accordance with the accepted formula based on the recommendation of 7th pay commission.
The combined impact on the exchequer on account of both dearness allowance would be Rs Rs 6,077.72 crore per annum and Rs Rs 7,090.68 crore in the Financial Year 2018-19 (for a period of 14 months from January, 2018 to February, 2019).
The hike in the DA is as per the agreed methodology of taking average of Consumer Price Index-Industrial Workers for the past 12 months.
The Confederation of Central Government Employees had termed it as a meagre hike in view of actual rise in cost of living index saying the CPI-IW was far from reality.
The union had also said that there was a lot of variation in the rates of price rise of commodities by Ministry of Agriculture and CPI-IW.